2004 outlook: IP telephony - Not ‘if’ but ‘when’

The Computerworld editorial team has collected the views of analysts and the industry about what to expect in the New Year. In this instalment, Computerworld editor David Beynon takes a look at how IP Telephony is shaping up for 2004.

It’s not ‘if’ but ‘when’ Australian organisations will tire of their trusty old PABXes and latch onto sexy new IP telephony according to the buzz around the convention rooms. And there’s no doubt that stacked against goodies elsewhere on the IT&T shopping list, IP telephony looks like a hot item.

It’s just a pity for vendors of this stuff that many would-be customers remain wary of various hurdles and have scheduled the ‘when’ beyond 2004.

The first hurdle is the lack of a really solid cost justification for ditching a very useful old switchboard yet to reach the end of its economic life.

Other hurdles include the state of the in-situ data network, application integration, and prsonnel issues embedded in rival voice and data camps.

Bjarne Munch, senior research analyst, infrastructure strategies at Meta Group Australia, sees all these hurdles throughout a highly fragmented market where readiness to adopt IP telephony is almost in inverse proportion to the size of company. Within this landscape are the large companies “holding a little bit back” until they’re sure that IP telephony is “up to par” with the reliability of the PABX systems they would replace.

Leaping those hurdles are the 12 to 20 per cent of organisations each year which replace old PABXes finally run into the ground, businesses consolidating systems after merger and acquisitions, those setting up in new offices, and government agencies where almost 14 per cent of organisations already use IP telephony, says Landry Fevre, research program manager for telecommunications at IDC Australia.

Geoff Johnson, Gartner vice president and research director, networking and telecomms, Asia Pacific, sees a “sweet spot” in the "immutable" PABX replacement market for 100- to 200-line (extension or handset) deployments. At this scale, based on IP telephony over LANs, Johnson reckons network performance can be “closely controlled and supported” and the “office politics surrounding adoption are usually not too outrageous”.

Gartner’s Johnson see the cost hurdles in Layer 2 and Layer 3 networking infrastructure and offers the following rule of thumb: data networks between two and three years old will need about 30 to 50 per cent of the equipment upgraded for successful voice over IP (VoIP). The upgrade rate rises to 80 to 100 per cent of equipment for data networks more than five years old.

Munch is a cost-justification sceptic. He believes there's a group of large organisations sitting back and now finding IP telephony “really hard” to cost justify compared to a couple of years ago when there were clear savings in international and STD tariffs. Tariff reductions have seen that argument harder to make.

IDC’s Fevre reckons the MAC (moves, adds, changes) savings are undeniable for very large organisations which can have three or four full time employees dedicated to just moving people from one phone socket to another. But when many already have cost-effective relationships with PABX service providers, MAC savings (in labour and in the end user convenience) do not pack enough punch to break legacy PABX investment cycles.

Johnson adds that the total cost of ownership for VoIP and IP telephony apps will be uncertain over the next few years because of the unknowns in the mix of developing new interfaces and third-party PABX applications.

Munch believes people issues have the potential to trip managers of IP telephony projects, particularly for big organisations with separate in-house “voice support” and “data support” groups. Poorly managed, the era of converged communications could make bitter rivals out of the old school, less formally trained voice group which nonetheless adheres to strict processes and procedures on PABX upgrades, and the diploma-equipped but often less formal data group. Munch advocates the groups be brought together and that the skills of all be brought up to scratch.

Munch says a lot of the clients he speaks with are looking to implement IP telephony in the next 12 to 24 months, but doesn’t expect to see a significant change in the market over 2004. At this stage he is not recommending that clients go out and deploy very large IP telephony systems, but instead adopt this phased approach: get a needs baseline; identify two vendors; trial the equipment in-house; get in-house people up to speed; merge voice and data groups into one (that alone could take six to 12 months) ; deploy a small pilot; and move to a commercial level trial of IP telephony with 20 to 30 end users.

Johnson advises that in 2004 enterprises plan for the step change in PABX technology by preparing a strategic plan to “avoid the tactical, opportunistic and often inconsistent adoption seen in many enterprises”. He also recommends that organisations base their IP integration decisions on their business needs rather than on IP infrastructure concerns.

While the cost benefit justification remains ambiguous, the true, long-term business benefits of IP telephony lay in the promise of converged communications. Current productivity gains include the ease of voice conferencing and VoIP-enabled unified messaging such as “find-me follow-me” hooks into software like Lotus collaboration and calendar applications.

Fevre stresses that long term, adoption of the Session Initiation Protocol (SIP) and its potential to integrate and support real-time interactive communications over IP networks -- mainly for voice, but also for videoconferencing, chat, gaming or even application sharing, will be a key driver of productivity benefits. He believes that the potential of integrated communication applications will ultimately be seized upon by Microsoft, which has now entered the space with its Live Communications Server.

IP telephony and the promise of converged communications platforms and applications is real and arriving. But unless you live in a ‘sweet spot’ you can wait until the data network is due for an upgrade and the old voice gear is ready for the tip.

Savings VoIP systems were about 22 per cent less expensive to operate than circuit-switched networks for 31 large companies surveyed - Nemertes (US)

Costs Are associated with: data network upgrade for voice including implementing for high availability and quality of service (QoS); securing telephony on a data network; training; and complicated integration activities – Meta Group Australia

Look before you leap

Technology analysts Kenneth Percy and Michael Hommer, both from Miercom, advise that before deploying any VoIP gear, you scrutinise your network with an audit that includes three primary considerations:

Utilisation and network statistics. Maximum, minimum and average metrics for bandwidth consumption, latency, jitter and packet loss should be included in your audit. Check latencies don't exceed 100 millisec, and maximum jitter should never be more than 40 millisec. Packet loss should be zero, but the rule of thumb for tolerable voice quality is less than 1 per cent.

Review of infrastructure elements. Ethernet switches that will be touched by VoIP traffic should support virtual LANs to allow segmentation and isolation of voice traffic. IP-based quality of service (QoS) -- such as type of service (TOS) or Differentiated Services (Diff-Serv) -- should be supported to allow prioritisation of packetised voice over more delay-tolerant traffic. Check these features are turned on and whether any configurations could pose problems.

Estimating bandwidth requirements. Most value-added resellers and integrators have tools to help you ascertain how much voice traffic is currently carried by your voice network. Also, your existing PABX system probably can report on yield utilisation information. There is a Web site full of calculators and tutorials on voice traffic utilisation at www.erlang.com

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